Sales climbed 35% to $117.1 million, ahead of views for $112.70 million. That ended a decelerating trend over the past several quarters.

Five Below has seen double-digit sales gains every quarter since its July 2012 IPO.

The company also raised full-year 2013 sales and earnings guidance.

"Five Below had a very strong second quarter with comps well above expectations," said Deutsche Bank analyst Paul Trussell. "The 6.6% comp growth is the best we've seen for Five Below in four quarters.

Shares shot up nearly 12% in late trading to what would be a new high. The stock rose 4% during the regular session.

The discounter operates at a time the consumer appetite for value remains strong. Its namesake stores sell a variety of fun, on-trend merchandise for the teen and preteen crowd, from sporting goods and games to jewelry and gag gifts, all for $1 to $5. It features all sorts of items the fickle teen crowd enjoys, like stickers to decorate a locker, magnets, inexpensive apparel such as T-shirts, board games and low-priced basketballs.

Five Below has been able to connect with teens by offering value in a few ways. It "aggregates" its assortment under one roof and pulls a lot of on-trend items together that really appeal to the teen and preteen crowd, said MKM Partners analyst Patrick McKeever. That helps Five Below stand out amid a crowd of youth-oriented retailers.

Its low apparel prices are unique among teen-targeted stores. Its main competition likely is from discount giants Wal-Mart (WMT) and Target (TGT), and dollar stores. But those stores target all age groups, giving Five Below an opportunity to carve out a niche.

"They've executed very well," said Dougherty & Co. analyst Jeremy Hamblin. "This is a company very early in its growth cycle. That's why investors are drawn to the story.

The company opened 18 stores and ended Q2 with 276 stores in 19 states, up 22% vs. a year earlier. Hamblin says it could have "in excess of" 2,000 stores over time.

And it continues to fare well with new stores.

"We like the stock because new unit productivity continues to improve and exceed expectations," Hamblin added. "When management plans budgets for the year, the company wants the average new store to generate $1.6 million in first-year sales. However, new units have actually been delivering closer to $1.8 million in (first-year) sales even as the company has pushed into newer geographies like Illinois and Michigan. We believe this is a powerful statement on the appeal of the store's concept.

Five Below jumps on fads early, he says, such as the latest craze, the Rainbow Loom kit for making rubber band links.

Strong merchandising has been a key driver of its growth, Trussell agreed.

"They tend to do a great job with their assortment of products and finding whatever the new trend is, whether it's in electronics, toys or seasonal items," he said.

Five Below's winning results are good news at a time when there's been broad weakness across the teen retail space. Teen clothiers Abercrombie & Fitch (ANF), Aeropostale (ARO) and American Eagle Outfitters (AEO) all recently reported steep declines in Q2 same-store sales.

They've struggled with a lack of fashion newness, says Hamblin.

But Five Below has been a "go-to" destination for seasonal merchandise and for spending on discretionary items like covers for smartphones, Hamblin said.

The value proposition of deep discounters continues to strike a chord with consumers. Last week, Dollar General (DG) reported second-quarter sales and earnings that beat views.